Riverview Bancorp (NASDAQ:RVSB) Has Affirmed Its Dividend Of $0.02
Riverview Bancorp, Inc. (NASDAQ:RVSB) will pay a dividend of $0.02 on the 16th of January. This payment means the dividend yield will be 1.6%, which is below the average for the industry.
Riverview Bancorp's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
Having distributed dividends for at least 10 years, Riverview Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Riverview Bancorp's last earnings report, the payout ratio is at a decent 36%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next year is set to see EPS grow by 37.5%. If the dividend continues on this path, the future payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.
View our latest analysis for Riverview Bancorp
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was $0.045 in 2015, and the most recent fiscal year payment was $0.08. This implies that the company grew its distributions at a yearly rate of about 5.9% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.
The Dividend Has Limited Growth Potential
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Riverview Bancorp's EPS has fallen by approximately 13% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
Our Thoughts On Riverview Bancorp's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Riverview Bancorp's payments, as there could be some issues with sustaining them into the future. While Riverview Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Riverview Bancorp that investors need to be conscious of moving forward. Is Riverview Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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